Privilege Tax & Licensing
The Privilege Tax & Licensing division is responsible for licensing businesses, processing city privilege tax audits, collecting privilege tax accounts and providing statistical information to city management and the community.
This division make every effort to provide the business community with the best possible customer service. To accomplish this, employees will give answers to your tax questions and provide any forms you may need. Please be advised that the city is not bound by oral advice given by staff members. Written responses will be given to all questions submitted in writing. The questions can be mailed to this division at 201 South Cortez Street, Prescott, AZ 86001. For more information email the Tax & Licensing department.
Public Notice of Proposed New or Increased Fees or Taxes
In accordance with A.R.S. §9-499.15, public notice is hereby given that the Prescott City Council may: Consider approving changes to the Prescott City Code, Chapter 4, on July 26, 2011, but no sooner than 60 days after the posting date of this notice. On April 29, 2011, the Municipal Tax Code Commission addressed and approved changes to the Model City Tax Code. On July 26, the Prescott City Council will consider ratifying these changes into the City Tax Code. They include:
- Sec 595(c) - Spec Builder Successor
- Sec 445(s) - HB2510 (rental of properties to related parties)
- Sec. 415, 416, 417 - HB2700 (solar energy devices)
- Sec. 660 - SB1196 (use tax preemption for public/charter schools)
- Sec. 100 - Medical marijuana
- Sec. 100 - Speculative Builder format (housekeeping change)
See the proposed changes here. Notice posting date: May 25, 2011
Transaction Privilege Tax (Sales Tax)
All Arizona cities and towns have a transaction privilege tax which is commonly referred to as a sales tax. However, the transaction privilege tax is far more extensive than retail sales. It includes taxation of residential and commercial rentals; taxation of utilities and communications; taxation of retail sales; construction activities; and auto dealerships - to mention a few.
Use tax is levied on the purchase of tangible personal property stored, used or consumed within Prescott City limits, when a equivalent city privilege tax has not been paid. A more detailed explanation of the differences between the privilege and use taxes can be found in the “What are Use Taxes?” brochure.
- 2011 City of Prescott Privilege & Use Tax Code (pdf, 339.3 kb)
- Tax Licensing Eligibility Requirements (pdf, 25.9 kb)
House Bill 2745 standards for licensing
Some tax and licensing forms are available for download here. For all others please call 777-1268 or stop by the Tax & Licensing Division at City Hall, 201 S. Cortez. Forms must be completed correctly and in entirety to be processed. Please call for assistance if you are unsure how to complete a form.
- Peddlers, Solicitors & Transient Merchants Application (pdf, 119.6 kb)
Peddlers, Solicitors & Transient Merchants Application.
- Privilege Tax Application (pdf, 647.5 kb)
Privilege Tax Application.
- Privilege Tax Report Form (pdf, 1031.5 kb)
Compatible with Adobe Reader 9 or greater
- General Guidelines (pdf, 31.3 kb)
- Taxpayer Bill of Rights (pdf, 49.1 kb)
- What are Use Taxes? (pdf, 99.2 kb)
- Q. What is the total tax rate?
- A. The combined tax rate for the State of Arizona, Yavapai County, and the City of Prescott for all taxable activities is 9.35%. The combined rate consists of 6.6% for the State, 0.75% for the County and 2% for the City of Prescott.
- Q. Does the City of Prescott tax the rental of real property?
- A. Yes, the City taxes both the rental of residential and commercial property. The tax rate is 2% for all rentals of real property.
- Q. Is food taxable in Prescott?
- A. Yes, at the City tax rate of 2%. Both the State and Yavapai do not tax food for home consumption.
- Q. Do I have to file a tax report if I didn't do any business in Prescott?
- A. Yes if you receive a tax report you have to complete it and return it whether you did any business in Prescott or not. To simplify the processing of returns when there has been no activity there is a block to check that indicates no activity. All returns must be signed to validate.
- Q. Is there a transaction privilege tax application on line?
- A. Yes, click here for the application.
- Q. Do I have to pay privilege tax if I do not charge my customers?
- A. Yes it is the responsibility of the business to remit privilege tax on their gross receipts less applicable deductions whether you pass the tax on or not.
- Q. Are Internet sales taxable? If so, at what tax rate?
- A. Items sold by Prescott based businesses via the Internet to residents of Arizona are taxable and reported to the City at the 2% tax rate. The State would also collect taxes on sales made within Arizona.
- Q. Are repair, service installation labor and shipping taxable.
- A. For retail transactions these types of charges are not taxable if the charges are separately stated to the customer and the seller properly accounts for the charges. Contractors who perform labor only for customers are subject to privilege tax less the allowed 35% contracting deduction.
- Q. Where do the city privilege (sales) and use taxes go?
- A. 1% goes to the General Fund and 1% goes to both road improvements and open space acquisition.